This is a little confusing but, if I understand correctly;
1. If your dad had transferred the house to your sister more than 5 years before entering FD, the full value of the house would be excluded from the Financial Assessment.
2. If, however, he'd transferred the house more than 5 years prior but had retained a right of residence, there would be a value attached to that right, I think 10% of the value.
3. If the house was transferred within 5 years of entering FD, the full value would be included in the Assessment, regardless of the right of residence.
4. If the will states that, after his death, your sister retains a right of residence, after his death, I don't see how this would be relevant to the Financial Assessment and I can't see a refund arising.